The decision, made in the United States Bankruptcy Court for the Eastern District of Virginia on Tuesday, applies to hundreds of Pier 1 stores throughout the country, which have been closed for nearly a month because of COVID-19. The retailer said it hopes to open the majority of its stores by June, however, Pier 1 is scheduled to give an update to the bankruptcy court on its operations on May 21.
Once stores open, Fort Worth, Texas-based Pier 1 is expected to pay landlords and suppliers as it moves through the bankruptcy proceedings.
“Based on what’s going on in the Pier 1 case, it was no surprise the judge extended what he originally granted,” said Eric Horn, an attorney at A.Y. Strauss not involved with the Pier 1 case. “Everyone is waiting for stores to reopen and when they do, they will collect payments again. This was no shock to landlords.”
Horn said it’s apparent Pier 1 hasn’t opened stores yet and nothing has changed since the court ruling earlier this month.
“At some point, rent is going to have to start to get paid, but it’s a matter of how fast that will happen going forward,” he added.
Pier 1 has made efforts to cut costs during the pandemic as the company closed more than 900 of its retail stores throughout the country. In the past month, Pier 1 temporarily furloughed about 65% of its corporate employees, as well as all of its retail employees, for a total of more than 9,000 workers. The temporary furloughs helped save the retailer $50 million in overhead.
Until the retailer can give guidance on reopening stores, Pier 1 CEO Robert Riesbeck told creditors he didn’t think anyone was going to bid on the business.
Adding to the uncertainty, Riesbeck recently sent a Worker Adjustment and Retraining Notification letter to the Texas Workforce Commission, saying it might permanently close its corporate headquarters in the Dallas area, affecting hundreds of corporate jobs, including his own. The company also filed WARN letters in Texas and other states for its distribution centers.
“If a sale of the business does not occur, or occurs in a different manner than we anticipate, absent another source of financing, the company’s [headquarters] will permanently close,” Riesbeck wrote in the letter to the Texas Workforce Commission.
Without a corporate headquarters, it would be difficult to continue operations, Steve Lieberman, CEO of The Retail Connection, told CoStar News last week. Lenders have been preparing for a default on the corporate home of Pier 1 since last month.
At this point, Horn said landlords, suppliers and creditors likely are already working with Pier 1 and are aware of the dire situation.
“Everyone knows what’s going on in the marketplace,” Horn added. “I think everyone is sitting back and waiting for everything to reopen to reassess their positions and choose the best path forward.”